Question

In 2019, Rosalva sold stock considered short-term for a gain of $985 and stock considered long-term...

In 2019, Rosalva sold stock considered short-term for a gain of $985 and stock considered long-term for a loss of $3,940. She also had a $3,690 short-term loss carryover from 2018 and a $1,395 long-term loss carryover from 2018.

Required:

  1. What amount will be shown as a short-term gain (loss) for 2019?
  2. What amount will be shown as a long-term gain (loss) for 2019?
  3. How much of the loss is deductible in 2019?
  4. What is the amount of long-term carryover to 2020?
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Homework Answers

Answer #1

(a)

Short term capital loss to be shown in 2019

= Short term capital gain of 2019 - Carry over loss from previous years

= $985 - $3,690

= $2,705

Short term capital loss = $2,705

(b)

Long term capital loss to be shown in 2019

= Long term capital loss for 2019 + carry over long term loss from previous years

= $3,940+ $1,395

= $5,335

Long term capital loss = $5,335

(c)

The capital loss is deductible upto $3,000 per year. The remaining losses is carried forward to future years.

(d)

The current year deduction of $3,000 is first deducted from short term capital loss of $2,705 and the remaining $295 of long term capital loss is deductible from long term capital loss.

The long term loss to be carried forward to 2020 = $5,335 - $295

= $5,040

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